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GR No.

195728 April 19, 2016

Paramount Life and General Insurance Corporation vs.
Cherry T. Castro and Glenn Anthony T. Castro

*procedural: third-party defendant and interlocutory order; no appeal may be taken

for an interlocutory order; third-party defendants, to avoid multiplicity of suits*

PPSBI (bank) obtained insurance from Paramount for a group policy. Virgilio Castro
obtained a housing loan from PPSBI and required him to apply for mortgage
redemption insurance (MRI) from Paramount to cover the loan. In his application,
Virgilio named Cherry (wife) and Glenn (son) as his beneficiaries. Virgilio died of septic
shock in February 2009. A claim was filed for death benefits but was denied by
Paramount on the ground of material representation by concealing adverse health
history and private consultations. The Castros contended that Paramount was
estopped from raising supposed misrepresentations as they have approved his
application, and that Virgilio submitted all the necessary evidence of insurability to the
satisfaction of Paramount.

1. WON the Castros can implead the PPSBI as third-party defendants?
2. WON the RTC erred in denying the Motion to Dismiss (the Complaint for
Declaration of Nullity of Individual Insurance Contract) filed by the Castros?

1. Yes. “In allowing the inclusion of the PPSBI as a third-party defendant, the Court
recognizes the inseparable interest of the bank (as policyholder of the group
policy) in the validity of the individual insurance certificates issued by Paramount.
The PPSBI need not institute a separate case, considering that its cause of action
is intimately related to that of Paramount as against the Castro’s. The soundness
of admitting a third-party complaint hinges on causal connection between the
claim of the plaintiff in his complaint and a claim for contribution, indemnity or
other relief of the defendant against the third-party defendant.”
2. No. In Rayos v. City of Manila, the Court ruled that an order denying a motion to
dismiss is interlocutory and, hence, not appealable. That ruling was based on
Section 1 (b), Rule 41 of the Rules of Court. “An appeal may be taken from a
judgment or final order that completely disposes of the case, or of a particular
matter therein when declared by these Rules to be appealable. No appeal may
be taken from:… (b.) An interlocutory order; …”.
The petitions to dismiss the Complaint of Paramount were dismissed.

Added notes:
Mortgage Redemption Insurance - a device for the protection of both the mortgagee
and the mortgagor. On the part of the mortgagee, it has to enter into such form of
contract so that in the event of the unexpected demise of the mortgagor during the
subsistence of the mortgage contract, the proceeds from such insurance will be
applied to the payment of the mortgage debt, thereby relieving the heirs of the
mortgagor from paying the obligation. In a similar vein, ample protection is given to the
mortgagor under such a concept so that in the event of death, the mortgage
obligation will be extinguished by the application of the insurance proceeds to the
mortgage indebtedness.
(kapag mamatay ang insured na may utang sa creditor, ang insurance ay
magbabayad sa utang nya.)